America’s Jobs Crisis

Felix Salmon has a good post digesting the latest jobs report. It’s worth reading in entirety, but I like Felix’s idea for job creation in America:

The solution to this problem is nothing complex — the arbitrage is sitting there in the first chart, plain for all to see. The government can borrow at 1.45%: it should do so, in vast quantities, and invest that money back into the economy itself. Take a few hundred billion dollars and use it to fix our broken infrastructure, to re-hire all those laid-off teachers and firefighters, to provide some kind of safety net for the millions of Americans who have been out of work for more than a year. Even if the real long-term return on any stimulus package was zero, the nominal long-term return would be well over 1.45%, making the investment worthwhile.

To put it another way, not all crises look the same. Back in 2008-9, the fact that we were in a crisis was obvious, and it resulted in unprecedented levels of enormous coordinated actions between Treasury and the Fed. Now, however, when we look at the crisis-level spreads in the first chart, we don’t think “crisis” any more — and the sense of urgency that everybody felt in 2008-9 is long gone. How many more dreadful jobs reports do we need before it returns?

 

The Farewell Letter to Your Coworkers

The Wall Street Journal has a fun piece on funny or awkward farewell emails people have written to their coworkers upon departure from their employer:

At the law firm Alston & Bird, one departing associate baffled his colleagues by sending everyone a black-and-white photo of himself, with only his name and start and quit dates written beneath “as if it was a tombstone,” says John E. Stephenson, a partner in Atlanta who has been keeping a “Dead Soldiers” file of his colleagues’ goodbye notes for 27 years. “It caused a firestorm because people thought he had died.” The associate had to follow up with another email saying, “I’m not dead. I’m sorry to have concerned so many of you,” Mr. Stephenson says.

I like this parody farewell email from Chris Kula:

For nearly as long as I’ve worked here, I’ve hoped that I might one day leave this company,” he began. “I have been fortunate enough to work with some absolutely interchangeable supervisors on a wide variety of seemingly identical projects—an invaluable lesson in overcoming daily tedium in overcoming daily tedium in overcoming daily tedium.

But the best way to get someone’s attention? Write an email with the subject line “FREE FOOD.”

Why Young People go into Finance, Law, and Consulting

Tyler Cowen has a simple theory why young people tend to go into law, finance, and consulting:

The age structure of achievement is being ratcheted upward, due to specialization and the growth of knowledge.  Mathematicians used to prove theorems at age 20, now it happens at age 30, because there is so much to learn along the way.  If you are a smart 22-year-old, just out of Harvard, you probably cannot walk into a widget factory and quickly design a better machine.  (Note that in “immature” economic sectors, such as social networks circa 2006, young people can and do make immediate significant contributions and indeed they dominated the sector.)  Yet you and your parents expect you to earn a high income — now — and to affiliate with other smart, highly educated people, maybe even marry one of them.  It won’t work to move to Dayton and spend four years studying widget machines.

You will seek out jobs which reward a high “G factor,” or high general intelligence.  That means finance, law, and consulting.  You are productive fairly quickly, you make good contacts with other smart people, and you can demonstrate that you are smart, for future employment prospects.

Combined with the fact that these jobs tend to be higher-paying than anything else available, and we’ve got a recipe for young people to pass opportunities in technology, public service, and the like. This New York Times piece sheds some data on percentage of people from Ivy League schools that directly entered finance jobs. For example, those graduating from Harvard were more likely to enter finance than any other career (in fact, 17 percent of new grads did so in 2010, which is down from 28% in 2008, just before the financial crisis).

What Software is Used at Facebook?

Andrei Alexandrescu, a self-professed hacker and current employee at Facebook, is interviewed by Server Side Magazine and answers what software/tools they use at Facebook. It’s a Linux world, with a lot of tools developed in-house:

Each Facebook engineer gets a choice of MacBook or Windows laptop, plus the invariable 30′ monitor (yum). But development is not really happening on the laptop itself; to get any work done, engineers connect to a remote Linux machine (each engineer has one assigned) using a variety of protocols over ssh (plain terminal, nx, vnc, and probably more).

There’s freedom in choosing editors, so the usual suspects – emacs and vim – are quite popular, with some Eclipse and others here and there. I personally prefer emacs via nx, the combo works quite swimmingly even over a slow connection.

We also have a lot of cool organizational tools, many developed in house. That sounds a bit NIHish, but the history behind it is that we tried hard to make off-the-shelf tools work at the scale and quality we need them to, failed, and had to write our own.

The tools use our own technologies (talk about dog food) so they work, look, and integrate beautifully. Best part, if someone doesn’t like something, well, they can just fix it. (To wit, our email and calendar software is off-the-shelf and is the most unpleasant tool to deal with. Get this – we have a few people “specialized” in sending large meeting invites out, because there are bugs that require peculiar expertise to work around. Not to mention that such invites come with “Do not accept from an iPhone lest you corrupt the invite for everyone!”)

Anyway, back to our tool chain. Once an engineer makes a code change that passes unit tests and lint, they submit for review a so-called “diff” via our Phabricator system, which we open sourced.

The reviewers are selected partly manually, partly automatically; virtually not one line of code is committed without having been inspected by at least one (other) engineer. Phabricator is great at this flow, making diff analysis, comment exchange, and revision updates very handy. I’d recommend it.

Once the diff has been approved, the author uploads it to our central git repository. We love git; when I joined two years ago, we were just starting to migrate from svn to git, and today we virtually all use git. Some of us (including myself) wrote a few popular git scripts that integrate with our workflow.

To build C++ code we have our own build system driving a build farm. I don’t do front-end work, so I don’t know many details in that area; in broad strokes, we use the recently-released HipHop Virtual Machine (HHVM) for development, and the static HipHop compiler for the production site.

We have quite a few more browser-based tools for improving workflow, such as task management, discussions, wiki, peer review, recruiting and interviewing, analytics, systems management, and many many more. Really for pretty much any typical need “there’s an app for that”. And if there isn’t, there’s a vast infrastructure allowing you to build one quickly.

Read the full interview to find out about the D programming language…

A Blow to Pinstripe Aspirations: Wall Street Layoffs

This piece in today’s NYT’s Dealbook has generated a flurry of comments. It’s about young people losing their jobs from investment banks and other financial firms. Read the entire piece here and then judge for yourself…

The money quote:

Sam Meek, 27, who was laid off in September when his Connecticut hedge fund decided to downsize, used to spend $500 on charity dinners and lavish golf outings. Now, it’s home-cooked meals and beer on the sofa. Recently, Mr. Meek and his roommate, another unemployed banker who spoke on the condition of anonymity because he did not want to jeopardize his job search, sat together in the kitchen filing for unemployment and drinking a bottle of Champagne.

“I’m scraping by right now,” he said.

Scraping by, huh? Needless to say, the majority of the 300+ comments have been pejorative; many have been deleted for abusive language and/or content.

And this was a good quote about the sentiment of elite/prestigious jobs:

The mood has darkened so much that even the young Wall Street workers who still have prestigious jobs are considering letting go of the brass ring.

“It’s lost its luster,” said a former Goldman analyst who left the financial sector this year. The former analyst, who spoke on the condition of anonymity because he signed a confidentiality agreement with the firm, said that in addition to losing some of the monetary benefits of their jobs, his friends who remained in finance were suffering from peer envy. “The new status jobs aren’t at Goldman Sachs. They’re at Google, Apple, and Facebook.”

A brief collection of comments was posted in another post here. I will agree with the nuanced comment by Timothy C. from Queens:

“Let’s not be too harsh here. I work in the financial industry, and in my own company, about half the workers (myself included) are in the back office, where salaries are generally in the middle-class range. Cuts in the financial industry tend to hit support staff much harder than the headline-grabbing six-figure earners in the front office. Many of my friends who have been laid off were making $40 or $50K a year. Not bad, of course, but nowhere near the stereotype of the financial industry worker.”

What are your thoughts on these young unemployed? Do you have any sympathy for them?

How Elite Firms Hire

Lauren A. Rivera’s paper “Ivies, Extracurriculars, and Exclusion: Elite Employers’ Use of Educational Credentials” provides unprecented clues about the way elite firms screen resumes, conduct interviews, and hire. The paper is gated, but here is the abstract:

Although a robust literature has demonstrated a positive relationship between education and socio-economic attainment, the processes through which formal schooling yields enhanced economic and social rewards remain less clear. Employers play a crucial role in explaining the returns to formal schooling yet little is known about how employers, particularly elite employers, use and interpret educational credentials. In this article, I analyze how elite professional service employers use and interpret educational credentials in real-life hiring decisions. I find that educational credentials were the most common criteria employers used to solicit and screen resumes. However, it was not the content of education that elite employers valued but rather its prestige. Contrary to common sociological measures of institutional prestige, employers privileged candidates who possessed a super-elite (e.g., top four) rather than selective university affiliation. They restricted competition to students with elite affiliations and attributed superior abilities to candidates who had been admitted to super-elite institutions, regardless of their actual performance once there. However, a super-elite university affiliation was insufficient on its own. Importing the logic of university admissions, firms performed a strong secondary screen on candidates’ extracurricular accomplishments, favoring high status, resource-intensive activities that resonated with white, upper-middle class culture. I discuss these findings in terms of the changing nature of educational credentialism to suggest that (a) extracurricular activities have become credentials of social and moral character that have monetary conversion value in labor markets and (b) the way employers use and interpret educational credentials contributes to a social closure of elite jobs based on socio-economic status.

Bryan Caplan at the Library of Economics and Liberty provides the summary of the paper.

The approach behind the research:

From 2006 to 2008, I conducted 120 interviews with professionals directly involved in undergraduate and graduate hiring decisions in top-tier firms in each of the three industries under study (i.e., 40 per industry).  Participants included hiring partners, managing directors, and mid-level employees who conduct interviews and screen resumes as well as human resource managers.

To supplement interviews with behavioral data, I conducted fieldwork within the recruiting department of one elite professional service firm over a period of nine months. My role was that of a participant observer.  Given my prior professional experience at a peer firm and in event planning, I was brought on as an unpaid “recruiting intern” to help plan and execute recruitment events…  I shadowed recruiters through the recruitment process for full-time and summer associate candidates from a single, elite professional school, debriefed interviewers on job candidates immediately following interviews, and sat in on group deliberations where candidates were discussed and ultimately selected.

And the important results from the research/interviews:

1. Most applications/resumes practically go straight in the trash.  

Because professionals balanced recruitment responsibilities with full-time client work, they often screened resumes while commuting to and from the office and client sites; in trains, planes, and taxis; frequently late at night and over take out… [E]valuators tended to do so very rapidly, typically bypassing cover letters (only about fifteen percent reported even looking at them) and transcripts and reported spending between 10 s to 4 min per resume.

2. Evaluators have a lot of slack.  

[M]ost firms did not have a standard resume scoring rubric that they used to make interview decisions, evaluators reported “going down the page” from top to bottom, focusing on the pieces of resume data they personally believed were the most important “signals” of candidate quality. 

What’s startling is that evaluators explicitly select candidates similar to themselves in school rank, grades, extracurriculars, and so on.  For example:

[R]oughly one-third of evaluators did not use educational prestige as a signal. One of the
primary differences between these two groups was their own educational history, with those who had attended “top” schools being more likely to use educational prestige as a screen than those who had attended other types of selective institutions.

3. Super-elite credentials matter much more than your academic record:

[E]valuators drew strong distinctions between top four universities, schools that I term the super-elite, and other types of selective colleges and universities. So-called “public Ivies” such as University of Michigan and Berkeley were not considered elite or even prestigious…

4. Super-elite schools matter because they’re strong signals, not because they’re better at building human capital:

Evaluators relied so intensely on “school” as a criterion of evaluation not because they believed that the content of elite curricula better prepared students for life in their firms – in fact, evaluators tended to believe that elite and, in particular, super-elite instruction was “too abstract,” “overly theoretical,” or even “useless” compared to the more “practical” and “relevant” training offered at “lesser” institutions…

[I]t was not the content of an elite education that employers valued but rather the perceived rigor of these institutions’ admissions processes. According to this logic,
the more prestigious a school, the higher its “bar” for admission, and thus the “smarter” its student body.

In addition to being an indicator of potential intellectual deficits, the decision to go to a lesser known school (because it was typically perceived by evaluators as a “choice”) was often perceived to be evidence of moral failings, such as faulty judgment or a lack of foresight on the part of a student.

5. Extracurricular activities matter, but only if they meet a certain threshold — they must appear as passions rather than resume fillers (this is important):

[E]valuators believed that the most attractive and enjoyable coworkers and candidates would be those who had strong extracurricular “passions.” They also believed that involvement in activities outside of the classroom was evidence of superior social
skill; they assumed a lack of involvement was a signal of social deficiencies… By contrast, those without significant extracurricular experiences or those who participated in activities that were primarily academically or pre-professionally oriented were perceived to be “boring,” “tools,” “bookworms,” or “nerds” who might turn out to be “corporate drones” if hired.

But they have to be the right kind of extracurriculars.  

Across the board, they privileged activities that were motivated by “personal” rather than “professional” interest, even when activities were directly related to work within their industry (e.g., investing, consulting, legal clinic clubs) because the latter were believed to serve the instrumental purpose of “looking good” to recruiters and were suspected of being “resume filler” or “padding” rather than evidence of genuine “passion,” “commitment,” and “well-roundedness.” 

Caplan explains: “Don’t imagine, though, that you should merely follow your bliss”

[T]hey differentiated being a varsity college athlete, preferably one that was also a national or Olympic champion, versus playing intramurals; having traveled the globe with a world-renowned orchestra as opposed to playing with a school chamber group; and having reached the summit of Everest or Kilimanjaro versus recreational hiking. The former activities were evidence of “true accomplishment” and dedication, whereas the latter were described as things that “anyone could do.”

6. Grades do matter somewhat, but mostly as a cut-off.  They’re a signal of work ethic more than IQ:

[M]ost evaluators did not believe that grades were an indicator of intelligence. Rather, they provided a straightforward and “fair” way to rank candidates, particularly those within a given school… [G]rades were used to measure a candidate’s moral qualities. An attorney (Asian-American, male), believed that grades were an indication of a candidate’s coping skills, “It tells me how they can handle stress; if they’d had their feet to the flames before. If they’ve gotten good grades at a very competitive school, they’re probably pretty sharp and can take care of themselves.”

I went to Georgia Tech and Caltech — both are excellent schools (especially in engineering), but when applying for jobs not related to my major, I suspect I was always passed upon by those graduating from Harvard, Yale, and the other Ivies. My grades were at the top 5% of my class.

Mark Cuban on Creating Jobs in America

Mark Cuban, the outspoken owner of the 2011 NBA Champions Dallas Mavericks, has an unorthodox view on how to create jobs in America. Forget the proposals by the Republicans and Democrats, he argues, and focus at the source: American corporations. What do they need to create jobs?

How is this for a revolutionary thought: Companies that would create jobs if they had more cash know who they are. Right ? If you own a company and are thinking to yourself “Self, if I could borrow or get an investment into my company I could hire X more people to grow the company/meet demand/release a new product/whatever”  So rather than guessing and hoping what might happen, why don’t we let companies self identify themselves ?

And not only should they self-identify themselves as companies, they should be able to bid on Government Loans or even actual equity investments. Call me crazy, but I think we should be playing a game of “I Can Name that Tune in X Notes” re-named and reformatted as “I Can Create X Jobs for Y Amount of Money”

Would this system be open to everyone? No, says Mark Cuban:

Of course you will have to set some minimum parameters in order to prevent the dreamers, crazies and who knows whats from clogging up the system. I would set those minimums including: The company must be in business for at least 10 years. They must be have at least 100 full time employees. They must do 100mm in revenues.  And of course they must be up to date on their taxes and I’m sure there are other things to think of as well.

Ten years seems an awfully long time for a company to be considered established, but Cuban’s idea is certainly an interesting one. Especially if you believe Cuban’s argument that tax cuts are only going to help Americans to pay off their massive debt (credit card, mortgage, student loans) rather than go out and buy consumer goods…

What do you think?

Readings: Apple’s iPad, Photography, Superstar Effect, Unpaid Internships

Here’s what I have been reading over the weekend:

(1) “Apple IPad’s Debut-Weekend Sales May Be Surpassing Estimates” [Business Week] – the numbers are in, and it looks like Apple had a spectacular weekend in terms of iPad sales.

The iPad’s initial sales may have reached 700,000 units, Piper Jaffray & Co.’s Gene Munster said in an interview today. The Minneapolis-based analyst previously predicted sales of 200,000 to 300,000, while Sanford C. Bernstein & Co.’s Toni Sacconaghi projected 300,000 to 400,000.

With the cheapest iPad selling for $499 and the top of the line model selling for $829, one can make an early estimate from retail sales of the iPad in just one weekend. If you assume that the average iPad sold for $600 (taking account three things: taxes, that Apple sold a significant number of 32GB and 64GB iPad models as well the 3G iPad models, and that shoppers probably bought accessories and other items from Apple in addition to the iPad), and the number is astonishing: at least $400 million of revenue this weekend.

(2) “Is Photography Over?” [San Francisco Museum of Fine Art] – a spectrum of answers from critics and photographers on the state of photography.

(3) “Tiger Woods and the Superstar Effect” [Wall Street Journal] – an excellent piece by Jonah Lehrer on this interesting effect observed in sports, schools, and businesses. This is an interesting discovery:

The same phenomenon seems to also affect students taking the SAT. In a paper released last year, researchers from the University of Michigan and the University of Haifa compared average SAT scores with the average number of students in test-taking venues in all 50 states, and found that students who took the SAT in larger groups did worse. They concluded that the mere knowledge of their competitors—the sight of all of those other students scratching in their answers in the same room—decreased motivation.

(4) “Growth of Unpaid Internships May Be Illegal, Officials Say” [New York Times] – a timely article about students trying to find jobs and sometimes choosing to work for free. I was surprised by this quote from an N.Y.U. student:

It would have been nice to be paid, but at this point, it’s so expected of me to do this for free…If you want to be in the music industry that’s the way it works. If you want to get your foot in the door somehow, this is the easiest way to do it. You suck it up.

It seems like such a resigned attitude. Can that possibly be true of the music industry?